Phone Locking: Who's Got the Key?

Besides the user interface and price tag, Apple's new iPhone has brought to light at least two newsworthy points -- the issue of device locking and the sales channel. It's public knowledge that AT&T secured a five-year exclusive deal with Apple to distribute the iPhone, but it's a little less well known that users cannot use this phone with a T-Mobile contract. Although the iPhone uses GSM technology and the SIM card can be removed, a T-Mobile SIM card (and contract) cannot be used. Of course, hackers and phone-unlocking companies are hard at work to break that (e.g.: http://blog.iphoneunlocking.com/), but in the meantime a wireless carrier has to some extent, restricted device choice.

Enterprises have always wanted to control their communications infrastructure -- that's why PBXes continue to dominate the enterprise -- and that applies equally to mobile devices, if not more so. Few organizations have been able to settle on just one wireless carrier, as varieties in geographical coverage and service quality vary significantly enough to warrant second and third choices, much to the chagrin of those having to actually work with the carriers and process the bills. Those that have some kind of group bucket of minutes/bytes likely have some kind of mobility initiative, and device choice and selection should be part of that. Whether it's as basic as feature phone or a smartphone that includes access to corporate e-mail or a CRM/ERP application, the telecom and IT departments are thinking about support and management. For the feature phones it may be spare batteries, and for the higher-end phone it's software compatibility and hardware features. Either way, there's a conscious effort to make sure it's something they can support and will work now and in the future and across multiple carriers. It shouldn't be a surprise to learn, then, that these group plans prefer to use unlocked phones so that enterprises can use the same mobile device across the company whether it's Carrier A in Albert Lea or Carrier B in Boston. Another important thing to note is that handsets costs, while a consideration factor, don't make up the bulk of mobile TCO. It's the monthly recurring costs for voice and data, plus the mobile applications and management and security. If an enterprise needs to replace an employee's locked handset with another device, it should not be a big deal to do so, plus the original handset can be redeployed to another employee.

Of course, many organizations don't have a mobile policy at all, in which case it's laissez-faire and the phone and plan are full expensed or the employee bears some (or all) of the cost. Without a policy, device locking becomes a bigger problem. A half-dozen or more carriers could be represented across the employee base, which means the organization bears the full cost of every individual's monthly plan without the benefit of minute and byte pooling. Because there's no centralized planning or suggestions, the locked phones can't be avoided, and there's no representative from the wireless carrier's enterprise sales to provide unlocked versions of the phones.

What probably affects enterprises the most in relation to phone locking is that it's a confirmation that the wireless carriers control the sales channel. This limits the introduction of devices that the carriers may not like, especially those that may impact their bottom line. Many Wi-Fi-capable phones have not come to the North American market, though that's starting to change, because it could potentially have reduced the number of peak minutes. In a similar vein, Verizon limited the full Bluetooth capabilities of several mobile phones, which forced consumers to use more expensive services to transfer photos or to do other things. If the purchase of a mobile device was kept separate from that of a plan, then users wouldn't have to worry about SIM locking, but the reality is that most people succumb to the short-term device subsidies of $100 to $150 for the long-term cost of a two-year contract that's worth more 10 times that.The only way that this will change and mirror what's long been done in the Asia-Pacific markets is if consumers insist on the ability to bring any technically compatible phone to their plan, and then purchase those phones at the retail location of their preference. Nokia is doing a bit of this with their own stores, but the reality is that most small and larger consumer electronics stores already have agreements with wireless carriers to sell phones and service. It's going to take a few more Nokias and Apples to shake things up enough before device independence will be become a reality.